Correlation Between Dimensional International and Research Affiliates
Can any of the company-specific risk be diversified away by investing in both Dimensional International and Research Affiliates at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dimensional International and Research Affiliates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional International High and Research Affiliates Deletions, you can compare the effects of market volatilities on Dimensional International and Research Affiliates and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dimensional International with a short position of Research Affiliates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and Research Affiliates.
Diversification Opportunities for Dimensional International and Research Affiliates
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dimensional and Research is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and Research Affiliates Deletions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Research Affiliates and Dimensional International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dimensional International High are associated (or correlated) with Research Affiliates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Research Affiliates has no effect on the direction of Dimensional International i.e., Dimensional International and Research Affiliates go up and down completely randomly.
Pair Corralation between Dimensional International and Research Affiliates
Given the investment horizon of 90 days Dimensional International High is expected to under-perform the Research Affiliates. But the etf apears to be less risky and, when comparing its historical volatility, Dimensional International High is 1.26 times less risky than Research Affiliates. The etf trades about -0.01 of its potential returns per unit of risk. The Research Affiliates Deletions is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,477 in Research Affiliates Deletions on September 1, 2024 and sell it today you would earn a total of 311.00 from holding Research Affiliates Deletions or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 46.83% |
| Values | Daily Returns |
Dimensional International High vs. Research Affiliates Deletions
Performance |
| Timeline |
| Dimensional International |
| Research Affiliates |
Dimensional International and Research Affiliates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and Research Affiliates
The main advantage of trading using opposite Dimensional International and Research Affiliates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International position performs unexpectedly, Research Affiliates can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Research Affiliates will offset losses from the drop in Research Affiliates' long position.The idea behind Dimensional International High and Research Affiliates Deletions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Research Affiliates vs. Vanguard Mid Cap Value | Research Affiliates vs. SPDR SP Dividend | Research Affiliates vs. Pacer Cash Cows | Research Affiliates vs. iShares SP Mid Cap |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |